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February 2, 2016

Rengo Announces Restructure of Containerboard Production System

Rengo Co., Ltd. (Head Office: Kita-ku, Osaka; Chairman, President & CEO: Kiyoshi Otsubo) announces that the board has resolved at a meeting on February 2, 2016, to restructure the containerboard production system for the entire Rengo Group, including the closure of the Yodogawa Mill, in order to advance the transformation of its business structure and accelerate its growth strategy.

 

1. Reason for restructure of containerboard production system

The Rengo Group produces containerboard (linerboard and corrugating medium) at six mills in Japan, including five directly-managed mills and one through its consolidated subsidiary Marusan Paper Mfg. Co., Ltd. In order to drive effective utilization of resources and further strengthen its profitability, Rengo’s Yodogawa Mill (located at Fukushima-ku, Osaka) will be closed and the production locations of containerboard will be consolidated to five mills.
Yodogawa Mill is one of Rengo Group’s paperboard mills for linerboard. With more than 40 years since the paperboard machine was installed, its aging facilities make it difficult to meet future trends, such as lightweight linerboard. After considering the future maintenance and reinvestments required to sustain production at Yodogawa Mill, it was decided that Yodogawa Mill will be closed after two years.
In preparation for the closure of Yodogawa Mill, paperboard machine at Rengo’s Kanazu Mill (located at Awara-shi, Fukui Prefecture), currently used for producing corrugating medium, will be modified to allow it to also produce linerboard. Rengo Group’s production ratios for corrugating medium and linerboard will be reviewed for a restructure of an optimized production system corresponding to the demand.
Containerboard production at Yodogawa Mill will be shifted to other mills, including Kanazu Mill, so as to continue fulfilling Rengo’s supply responsibility.

 

2. Overview of Yodogawa Mill

Name Rengo Co., Ltd. Yodogawa Mill
Location

4-1-186 Obiraki, Fukushima-ku, Osaka

Floor Area 43,906 m2
Main Business Manufacturing of containerboard (linerboard)
Number of Employees 58 (as of January 1, 2016)

 

3. Schedule for Closure of Yodogawa Mill

End of March 2018 (scheduled)

 

4. Future Outlook

(1) Regarding the employees of Yodogawa Mill, which is to be closed, Rengo will handle this on the premise of maintaining their employment, such as being transferred to other divisions.
(2)

Regarding the land, buildings, and machinery of Yodogawa Mill, Rengo will look into other means of utilizing these items, including sale.

(3) Currently, Rengo Group has spare production capacity for containerboard. It is assessed that the volume of production and sales for containerboard will not fall below current levels even with the closure of Yodogawa Mill. Rengo will take comprehensive measures to ensure that the implementation of this issue does not impact our customers or other related parties.
(4) Impact to consolidated results arising from this issue will take place after FY ending March 31, 2018. Rengo will promptly announce any significant impact it assesses to arise from this.